The natural gas market is again showing signs of life after reversing back higher in Tuesday’s session.
Prior the yesterday’s rally , the market had been technically weak holding for the previous 7 days above 2.750-2.760 weekly chart support. The February 15 contract traded down to a new contract low of 2.783 on Monday but was unable to drop under support.
In Tuesday’s trade, the February contract was back and forth for much of the day but finished the session well-bid settling at 2.943, up .148 (5.3%).
The February contract also settled above the 10 day moving average on Tuesday for only the second time in the past 8 weeks. The last time this resistance was broken, the market quickly reversed back lower the following day. But if early strength can hold into today’s close, it would be another sign that a near term low has been set.
Buying has continued overnight rallying the February contract above 2.980-3.020 resistance. The next resistance level now becomes last week’s 3.176 high extending up to 3.220. A breakout above this resistance would turn the 40 day moving average at 3.580 into the next upside objective.
The 10 day moving average now becomes the first area of support today at 2.925 (2.932 current daily low). A drop back under this average would be a bearish indicator with the 2.750-2.783 area again becoming primary support.
Technical Indicators: Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index – Bullish (turned higher yesterday)
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